Table Of ContentMastura Jaafar
Azlan Raofuddin Nuruddin
Syed Putra Syed Abu Bakar
Business
Sustainability
Model for
Malaysian Housing
Developers
Business Sustainability Model for Malaysian
Housing Developers
Mastura Jaafar • Azlan Raofuddin Nuruddin
Syed Putra Syed Abu Bakar
Business Sustainability
Model for Malaysian
Housing Developers
Mastura Jaafar Azlan Raofuddin Nuruddin
School of Housing, Building and Planning School of Housing, Building and Planning
Universiti Sains Malaysia Universiti Sains Malaysia
Penang, Malaysia Penang, Malaysia
Syed Putra Syed Abu Bakar
School of Housing, Building and Planning
Universiti Sains Malaysia
Penang, Malaysia
ISBN 978-981-10-5265-1 ISBN 978-981-10-5266-8 (eBook)
DOI 10.1007/978-981-10-5266-8
Library of Congress Control Number: 2017945272
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Foreword by the Vice-Chancellor of Universiti
Sains Malaysia
Allow me to begin by congratulating the authors involved in extending the idea of
sustainability to the viability of a business model in the housing sector. Sustainability
has always been the core idea at Universiti Sains Malaysia, as we formulate and
implement policies and research outcomes for the betterment of all.
Property development remains a booming business sector in the country. It offers
the populace the availability of choices and the opportunity to become more estab-
lished on a personal level. At the same time, the industry promotes growth in the
skills-based job market too. However, as with any business model, the certainty in
continuity is a factor that could sustain businesses in the long run, as they face the
ever-growing and challenging market. Therefore, the publication of this book, with
the support of a university grant, is a truly welcomed effort, as it could serve as a
guide or reference to those involved in the industry.
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vi Foreword by the Vice-Chancellor of Universiti Sains Malaysia
I applaud this book also not only for its timeliness but for putting a ‘face’ behind
the development firms, for ‘humanising’ the entity behind the realisation of the all
too basic of human needs. Much maligned and abused, and deservingly so at times,
this effort dismantles much of the myth of the ‘snake oil’ peddlers of properties. We
are informed of anecdotes that illustrate the difficulties, obstacles and a retinue of
impediments that developers have to confront. At the same time, we are treated to
first-hand accounts from property players of the risks, challenges and struggles they
had to endure. We are then regaled about tales of their fortitude, perseverance and
sheer industry. They do all this, and more, not just for the pursuit of profit but to
enable the current and future generations to have the proverbial ‘roof over their
heads’.
I also welcome the manner in which this subject has been treated, as it covers a
fairly comprehensive range of small- to medium-sized firms right up to major
public- listed conglomerates. Interestingly still, certain core values were painstak-
ingly extracted and compared, making the book an extremely useful reference point
for potential developers, besides providing current ones with clear-cut examples of
learning from the country’s best. While some of the issues appear mundane and
obvious, they still needed to be stated unequivocally and convincingly – this effort
has managed to successfully capture and convey both.
Vice-Chancellor Professor Datuk Dr. Asma Ismail, FASc
Universiti Sains Malaysia
Preface
Housing is an indispensable need for human beings. It not only reflects a certain
standard of living, but its manifestation has transcended into a symbol of modernity
and lifestyle. In Malaysia, the Real Estate and Housing Developers’ Association
(REHDA) estimates that about 150,000 units of houses are required annually to
fulfil the population demands and household growth. To accommodate the growing
demand, the government of Malaysia has been encouraging the involvement of pri-
vate housing developers since the 1970s. The role of private residential developers
is significantly increasing and is considered a particularly important component of
the industry for national economic development.
Pragmatically, a housing developer is a coordinator of housing production that
works through the accumulation of necessary resources and capabilities and to pro-
gressively monitor the residential project until its final delivery. Within the develop-
ment process, the housing developer deals with numerous land and
construction-related activities such as site identification and assembly, subdivision
approval, site supervision and marketing the project. In Malaysia, housing develop-
ers normally comprise private developers, state-owned enterprises and cooperative
societies and are involved in all categories of housing provision encompassing
high-, medium- and low-cost houses as defined under the Housing Developers’ Act
(Control and Licensing) 1996. To develop and sell more than four houses, residen-
tial developers must obtain a licence from the Ministry of Urban Wellbeing, Housing
and Local Government (MUWHLG) and are encouraged to register as members
with REHDA.
Basically, housing development involves a huge amount of money and entails
diverse and complex processes such as land subdivision, building construction, final
product delivery, advertising, sales and marketing. In today’s globally competitive
environment, with twin facets of rapid technological progress and high customer
expectations, companies find it harder to ‘beat’ the competition by depending only
on their own capacity. For the real estate sector, notwithstanding the high capital
investments, the composition of industry players is rather ‘kaleidoscopic’; those
who are unable to perform will be forced to exit the industry, only to be replaced
with fledglings who may lack experience but are hungry for success for which the
vii
viii Preface
sector is well known for. Without sufficient industry knowledge, however, these new
entrants will invariably be exposed to the real possibility of business failure, and the
cycle is then repeated. The compelling question therefore is how new housing
developers can enhance their competitive advantage when entering the real estate
market and be able to sustain within the context of such a profitable but volatile
industry.
Simply put, housing developers gain profits from the margins derived from house
selling prices and, to an extent, a sense of self-satisfaction from the sale of the prod-
ucts, which oftentimes represents the single largest investment people will ever
make. Developers are, by nature, commercially driven in a business fraught with
risks. As such, the only real criterion they can ratchet up by themselves is sheer
motivation, intrinsically the desire to become a successful entrepreneur and, in so
doing, to transform their lives. Achieving competitive advantage depends on the
ability of housing developers to mobilise and exploit the linkages of the numerous
resources within their business environment. Each step in housing development
necessitates a close and mutual relationship between owner-managers and firm
capabilities, bearing in mind exogenous elements of the business such as govern-
ment intervention, economic condition and others of the ilk, all of which are touted
to affect the organisational performance.
This book focuses on three main themes – characteristics of owner-managers,
firm resources and management and external factors – and will display 20 case stud-
ies of property developers in Malaysia, with each case study premised on the three
themes. The case studies will be divided into three main sections comprising:
Small- and Medium-Scale Private Housing Developers
This section includes developers that are comparatively small to medium in size;
engaged in development projects characterised by modest numbers on relatively
small land banks, with average gross development value (GDV); and focused on
specific locations. The bulk of Malaysian developers fall into this category, as are
new market entrants, which may also include niche and boutique developers.
However, players in this category may also constitute spin-offs from large organisa-
tions with non-property core businesses.
Large-Scale and Public-Listed Housing Developers
This group comprises large organisations characterised by big set-ups both in terms
of personnel and locational presence, access to massive land banks and undertaking
projects of high GDV, with the capacity to build large numbers and townships. The
majority of developers in this category are public-listed entities with impressive
historical track records, access to vast financial potential, award-winning achieve-
ments and outstanding reputation. While there are large development firms that are
not public-listed, they normally have the carrying capacity to work with listed ones.
State-Owned Enterprises/Government-Linked Companies
As the name suggests, developers in this category are normally wholly owned enti-
ties of the federal or respective state governments. They can constitute small- and
medium-sized firms but can also comprise large public-listed entities. While they
Preface ix
are commercially driven like most businesses, developers in this category have a
duty towards fulfilling the agenda of homeownerships by the respective federal and
state authorities; the main focus would appear to be on affordable housing in varied
locations, although some developers have morphed to become aggressive niche
players in their own right.
It is hoped that this book will provide some insightful ideas for the industry’s
newcomers and existing players in Malaysia. We would like to thank all the devel-
opers who had willingly participated in the interview sessions. For a record, this
research work was supported by Universiti Sains Malaysia (Grant No: 1001/
PPBGN/816202).
Penang, Malaysia Mastura Jaafar
Azlan Raofuddin Nuruddin
Syed Putra Syed Abu Bakar
Acknowledgements
In the process of completing this book, we have benefited from several individuals’
support. The authors would like to thank Wan Mohd Dzulkifli Wan Daud (of Maka
Corporation Sdn Bhd) for his input and advice throughout the preparation process,
including valuable comments and motivation to complete the whole journey of pub-
lication. Also, we must extend our hearty thanks to Muhd Sazlie Ibrahim, our for-
mer research officer, who worked tirelessly especially during the early process of
manuscript writing. On top of that, we are indebted to all the research participants
who had agreed to share their experience, to be documented in this book. Besides
that, much appreciation goes out to the anonymous reviewers for taking their time
to provide precious feedback and suggestions. Finally, we express our sincere grati-
tude to William Achauer, a Springer publishing editor, for his kind help and
encouragement.
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